Correlation Between Procter Gamble and Suzano SA
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Suzano SA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Procter Gamble and Suzano SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Procter Gamble and Suzano SA, you can compare the effects of market volatilities on Procter Gamble and Suzano SA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Procter Gamble with a short position of Suzano SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Suzano SA.
Diversification Opportunities for Procter Gamble and Suzano SA
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Procter and Suzano is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding The Procter Gamble and Suzano SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzano SA and Procter Gamble is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on The Procter Gamble are associated (or correlated) with Suzano SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzano SA has no effect on the direction of Procter Gamble i.e., Procter Gamble and Suzano SA go up and down completely randomly.
Pair Corralation between Procter Gamble and Suzano SA
Assuming the 90 days trading horizon The Procter Gamble is expected to generate 0.79 times more return on investment than Suzano SA. However, The Procter Gamble is 1.26 times less risky than Suzano SA. It trades about 0.05 of its potential returns per unit of risk. Suzano SA is currently generating about 0.03 per unit of risk. If you would invest 5,521 in The Procter Gamble on August 27, 2024 and sell it today you would earn a total of 1,815 from holding The Procter Gamble or generate 32.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
The Procter Gamble vs. Suzano SA
Performance |
| Timeline |
| Procter Gamble |
| Suzano SA |
Procter Gamble and Suzano SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Suzano SA
The main advantage of trading using opposite Procter Gamble and Suzano SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Suzano SA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Suzano SA will offset losses from the drop in Suzano SA's long position.| Procter Gamble vs. Verizon Communications | Procter Gamble vs. Micron Technology | Procter Gamble vs. Southwest Airlines Co | Procter Gamble vs. Align Technology |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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